Thompson Company spent \(\$ 240,000\) to buy all the stock of Lake Corporation on January 1, 20X2. On December 31,20X4, the trial balances of the two companies are as follows:

Lake Corporation reported retained earnings of \(\$ 100,000\) at the date of acquisition. The difference between the purchase price and underlying book value is assigned to buildings and equipment with a remaining economic life of 10 years from the date of acquisition. At December 31, 20X4, Lake Corporation owed Thompson Company \(\$ 2,500\) for services provided.

\section*{Required}

a. Give all journal entries recorded by Thompson Company with regard to its investment in Lake Corporation during 20X4.

b. Give all eliminating entries required on December \(31,20 \mathrm{X} 4\), to prepare consolidated financial statements.

c. Prepare a three-part consolidation workpaper as of December 31, 20X4.

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Thompson Company Lake Corporation Item Debit Credit Debit Credit Cash $ 74,000 $ 42,000 Accounts Receivable 130.000 53,000 Land 60.000 50,000 Buildings and Equipment 500,000 350.000 Investment in Lake Corporation Stock 268.000 Cost of Services Provided 470,000 130,000 Depreciation Expense 35.000 18,000 Other Expenses 57.000 60.000 Dividends Declared 30,000 12,000 Accumulated Depreciation Accounts Payable Taxes Payable Notes Payable $ 265,000 $ 93,000 71,000 17,000 58,000 60,000 100,000 85,000 Common Stock 200,000 100,000 Retained Earnings 292,000 120,000 Service Revenue 610,000 240.000 Income from Subsidiary 28.000 $1,624,000 $1,624.000 $715.000 $715,000